Underinsurance and Average in Marine Insurance
The assured as its own insurer for the uninsured balance under MIA 1906 s.81, and proportionate recovery in general average under s.73.
Underinsurance in marine insurance is governed by the Marine Insurance Act 1906 s.81: where the assured is insured for less than the insurable value, or under a valued policy for less than the policy valuation, it is its own insurer for the uninsured balance. Section 73 applies the same proportion to general average contributions and salvage charges where the insured value is below the contributory value.
The full article will cover how the proportion is applied to partial losses, the difference between a low agreed value and a sum insured below the valuation, the general average consequences, and the 2025 PRC Maritime Code rule in Article 264. The cargo insured value article covers how this topic affects the sum insured on a cargo policy.